Market volatility is seemingly endless these days and with more inflation or even worse, a recession, potentially around the corner, investors need options. However, knowing if the market has bottomed out is hard which is why you should employ a strategy you might already use to get through high volatility, dollar-cost averaging. Most likely already implemented in your 401(k) contributions, dollar-cost averaging is putting fixed amounts over periods of time into the market, say monthly or bi-weekly. This helps mitigate the risks of lump-sum investing at the wrong time but still keeps a steady long-term approach to your financial investment. Dollar-cost averaging is the Goldilocks solution to timing the market and sitting out the volatility and for young investors, it's an especially great strategy to keep in a long-term approach.

Finsum: No need to get wildly creative in volatile times, simple strategies can be enough to navigate high volatility.

Fossil fuels are far from synonymous with ESG investing, but Russia’s invasion of Ukraine has upended the market. While many countries have made vows to cut global emissions and be net zero by 2050, that is getting put on pause as they are considering energy security first. Many euro funds have underweighted fossil fuels historically, but as of late almost 6% of ESG funds now own Shell which was previously zero at the end of 2021. The underperformance of funds is certainly a part of this and many are leaning on commodities surge in order to help recover. Moreover, the euro area has passed a regulation that includes gas and nuclear power as part of ESG. While some believe this is a good step because it encourages cleaner ffs such as natural gas others are worried it’s a slippery slope.

Finsum: This is a radical step in ESG regulation, and appears to be on pause as inflation has all countries concerned.

According to a study from Morningstar Indexes, pension funds and other asset owners in North America and Europe are adopting sustainable investment practices for their portfolios. Based on the “Voice of the Asset Owner” survey, which was based on 14 interviews with asset owners, pension funds saw ESG investments as a core element of investing. The asset owners stated that the inclusion of ESG investments was being driven by both their conviction in sustainable investing and client demand. The fund managers believe that ESG enhances their investment processes and does not subtract from investment returns. While implementing ESG can challenging due to shifting definitions and standards, their clients view climate as a big concern and are urging them to address global warming. While ESG has become a hot political topic in the U.S., pension funds are full steam ahead with ESG in their portfolios.

Finsum: Due to client demand and a conviction in sustainable investing, more and more pension funds are incorporating ESG strategies as a core element in their portfolios. 

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